Shares of GE recorded their 20th decline in the last 23 trading sessions, after Gordon Haskett analyst John Inch indicated that the bankruptcy of helicopter lessor Waypoint Leasing could summon more trouble for GE’s finance arm, GE Capital. GE’s shares dropped by ~ 4.5% on Monday after Inch’s warning became public.
According to Inch, Waypoint's excessive capacity and muted demand -- owing largely to the energy industry’s limited rotorcraft usage due to distress in the offshore oil and gas sector -- has further enhanced its struggles.
GE had acquired Milestone Aviation Group in 2014 for $1.8 billion, on the assumption that there wouldn’t be any write-down of the goodwill. But now with the probability of a writedown in the Milestone assets, it could prove extremely material for GE Capital, especially when the business accounts for ~75% of GE Capital’s $984 million goodwill as reported in the third quarter filling.
In reply to this warning, GE in an emailed statement to Bloomberg said that Milestone continues to perform well for the company and is expected to remain profitable in both 2018 and 2019. GE further added that serving across different industries, the current fleet utilization for Milestone stands at around 90% and is expected to earn $1.2 billion in 2018.